Bussines Ownership Flashcards
A Sole trader is..
Someone who runs a bussines on their own
Can sole traders employ people/ workers
Sole traders can employ people
Advantages of being a sole trader
Profit is all yours
You have all the control
Set up is easier as you have all the decisions
Disadvantages of being a sole trader
Storage of capital- don’t have enough capital to operate or grow
No continuity - owners dies, bussines will cease to exist
Unlimited liability
Capital is
Wealth in the form of assets
A business partnership is…
A busines owned by 2 or more people
Advantages of a business partnership
Different skills to offer
More capital raised
Shared workload
Continuity
Disadvantages of a partnership
Profit has to be shared between parties
There may be disagreements
Decision making may become slower
What is a sleeping partner in a partnership?
A sleeping partner invests money into the business. Not involved in day to day running or decision making
What is a Limited liability partnership
A partnership where the owners can only loose the capital they invested. Personal possessions are not liable
What is a deed of partnership? IT
A deed of partnership is a Contract between 2 or more people that provides..
Personal responsibility of each person
How profits and losses are shared
Details on how much capital each has invested
What’s a LLP
limited liability partnership
Definition of a company…
Business who’s owners are shareholders
What is a PLC
Public limited company
Sale of shared publicly on stock market
What is a LTD
Private limited company
Sale of shares to family and friends (privately)
What is a shareholder…?
Owners of private and public limited companies
What is a share?
A unit of ownership of a limited company
Private limited company (ltd) advantages
Original owners are likely to retain control
Private limited company (ltd) disadvantages
Shareholders have to agree about how dividends are distributed
Finance limited to ‘friends and family’
More expensive setting up than a sole trader or partnership
Public limited company advantages (plc)
Can raise large amounts of capital to expand business via stock market
Borrowing money from bank is easier as it’s seen as less of a risk
